The Ultimate Guide to Bitcoin - Amazon S3

[Pages:87]The Ultimate Guide to Bitcoin

Bitcoin is so quickly evolving. Therefor this guide is also evolving. You can always get the latest version at:

Distribution: You may freely distribute this work in digital or print media with the following conditions. 1) You do not alter the work 2) This distribution notice remains intact.

Disclaimer - This document is for information and illustrative purposes only and does not purport to show actual

results. It is not, and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action

? 2014 The Ultimate Guide to Bitcoin Author: Farm Boy

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Note to the Btc Pioneers:

I think we can all agree that Bitcoin is in it's infancy. There's also no question that it has the power to catalyze fundamental changes in the world economy as well as shift the balance of power. If Bitcoin takes hold and moves into the main stream then the power that governments hold over money and thereby over people, will will no longer be absolute.

In other words, by democratizing money, power shifts. By eliminating the monopoly governments hold over money it also eliminates their authoritarian power over people. Of course this has far reaching implications.

That being said, it is also obvious that there are many who will do everything in their power to prevent this from happening. We see evidence of this this every day. When mainstream media reluctantly mentions bitcoin it always seems to find an alarming angle. The headlines read "Bitcoin Crashes as Predicted". But a look at the graph shows merely a spike followed by a normalization. The 30,000 foot view consistently shows a climb. Articles abound about how bitcoin can easily be stolen. Or how it is only used for nefarious purposes. Whether it is an intentional smear campaign or simply the normal workings of the media, the end result is the same. Fear.

With so much propaganda spreading fear of bitcoin, there needs to be a counter measure. A way of educating the public. A leaflet dropped into the digital world. A way of dispelling the fear.

That is the purpose of this guide. It is a freely distributable guide in which we have gathered experts in various specialized knowledge areas. Experts who have contributed their knowledge in order to educate. Because:

Knowledge Dispels Fear

As detailed as this guide currently is, there is still much to cover. Bitcoin is ever evolving. As it evolves there is still much need for experts. If you have expertise in the area of bitcoin and feel capable of contributing your knowledge, then we invite you to apply as a contributor. Submit your application here:



? 2014 The Ultimate Guide to Bitcoin Author: Farm Boy

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Our Experts

Phil Weaver Dr. Syed Asfandyar Gilani Muhammad Waqar Aslam

Author

Founder:

PhD Scholar - City University London (UK) Doctorate, Computer Science City University London (UK) Dean - Department of Computer Science Leading University in Asia

Masters - MBA Finance University of Agriculture Faisalabad Diploma - Banking & Finance Institute of Bankers Pakistan Masters - Economics University of the Punjab Lahore Pakistan Financial analyst - Bank Alfalah Limited Linkedin Profile

? 2014 The Ultimate Guide to Bitcoin Author: Farm Boy

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? 2014 The Ultimate Guide to Bitcoin Author: Farm Boy

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Table of Contents

Introduction 1) Many Experts...............................................................8 2) More Like Money than Money....................................8 3) It's Not Like a Credit Card..........................................10 4) Buying Bits..................................................................12 5) It's Volatile! For Now!................................................13 6) You Can't Regulate it Away.......................................14 7) Can the System Be Hacked?.......................................14 8) Onward.......................................................................15

From the Computer Science Perspective 9) Cryptographic Concepts.............................................16 10 Digital Signatures......................................................18 11) Bitcoin Overview.....................................................19 12) Decentralized Electronic Currencies........................21 13) Proof of Work..........................................................23 14) Bitcoin Implementation Details...............................26 15) Client Types.............................................................29 16) Signing Only Client.................................................32 17) Thin Bitcoin Clients.................................................33 18) Bitcoin Mining Clients.............................................37 19) Backing Up Wallets.................................................38 20) Deterministic Wallets...............................................38 21) Brain Wallets............................................................39 22) Malware and Bitcoin................................................40 23) Watch Only Wallets.................................................41 24) Paper Wallets...........................................................42 25) Accepting Bitcoin with QR Codes...........................44 26) Bitcoin URI..............................................................45 27) Multi-Signature Transactions...................................46 28) Bitcoin Escrows........................................................48 29) Scalability.................................................................49 30) Conclusion................................................................50

From an Investors Perspective..................................................52 31) What is Bitcoin?.......................................................52 32) Brief history of Bitcoin............................................52 33) How does Bitcoin work?..........................................53 34) How to buy / get Bitcoin?........................................55 35) Why I invest in Bitcoin?..........................................56

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36) Investment Benefits of Bitcoin....................................56 37) Risks / disadvantage of Bitcoin...................................58 38) Factors affect the value of Bitcoin...............................59 39) Recommendation.........................................................60 40) References....................................................................61

? 2014 The Ultimate Guide to Bitcoin Author: Farm Boy

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Introduction

Understanding the fundamentals of Bitcoin is quite simple. However to fully understand it's possibilities and safe and efficient use of it we need to call upon experts from various fields. That is the purpose of this guide. To compile the necessary expertise to fully understand bitcoin in an easily understood document.

If you have followed bitcoin at all, you have seen outbursts from the media designed to create uncertainty and fear around bitcoin. And of course this is expected. You may have even panicked from some of them yourself. It's alright. They are pretty good at triggering emotions. It's what they do. Their business model requires it.

The only answer to that is education. To educate yourself and to help educate others. That is the purpose of this free ebook. That being said, you are free to distribute this wherever you see fit. On your website. In social media. Print it out and give it to a friend. Every new person that reads it is one more person that can speak intelligently about it. And as more and more people can speak intelligently about it, the darkness fades. The fear mongering media weakens. And the free market will be left to do what it will do. And that just might turn out to be an amazing thing.

So. You may freely distribute this document but you may not alter it.

You might also be interested in keeping up with the latest in bitcoin news. To get the latest bitcoin news delivered to your inbox and also be notified when we have updated this document please register at:

user/register

? 2014 The Ultimate Guide to Bitcoin Author: Farm Boy

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Many Experts

The subject of bitcoin is vast. It's not just about money. It's a lot about freedom. It's about cryptography. It's about economics. It's about business. No one person can be an expert in all these things. Which is why we've brought together a team to create this. Our goal is to have the top experts in all the necessary related fields contribute what is necessary to help people understand bitcoin. Maybe you can help?

It's More Like Money Than Money

Money - V1.0

Money = A medium of exchange

It's a simple concept. But it does rely on one thing. Agreement. Agreement between individuals within society. But at it's core. That's all that money really is. Throughout history we've used sea shells, beads, even rocks. And it has worked for eons. This, of course, is the simplest form of money. Any medium works. Although there are some obvious downfalls to some mediums. Attributes such as easy reproduction, loss of utility (for items that have utility), or impermanence can all lead to potential problems.

Money V2.0

Then there is a second form of money. That is commodity based money. In commodity based money precious metals, rice, precious spices. All kinds of things have been used. That has worked out okay. But with a few hindrances. Portability can be an issue. If cows are your medium of exchange it becomes a slightly difficult endeavor to pay your utility bill. Loss of utility is certainly an issue. Impermanence can be an issue. The value of the commodities utility versus the value of the money can be an issue.

? 2014 The Ultimate Guide to Bitcoin Author: Farm Boy

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